When calculating the return of a mutual fund, do I look at the NAV(+dividends) or do mutual funds trade as different prices compared to their NAV like closed-end funds or ETFs?

  • $\begingroup$ U.S. Mutual fund shares (unlike ETFs and Closed End Funds) are issued by and redeemed by the MF company at Net Asset Value. There is no market price distinct from NAV. $\endgroup$ – Alex C Sep 14 '18 at 8:38
  • $\begingroup$ Do you know if the same goes of European Mutual Funds? $\endgroup$ – user9259005 Sep 14 '18 at 8:41
  • $\begingroup$ No, sorry I don't know about European. $\endgroup$ – Alex C Sep 14 '18 at 8:59

To calculate the return of a mutual fund, you should use NAV prices. NAV prices represent the value of the fund divided by the outstanding number of shares. The NAV is calculated by the fund custodian bank, most commonly on a daily basis. If you call your bank and buy a fund, the usual way is that your bank buys it from the mutual fund company. You pay the initial fee.

In Europe, you can also trade some funds on the stock exchange. The stock exchange is publishing prices frequently. This price is oriented to the NAV. Example: the NAV of a Mutual Fund is 100, calculated and published yesterday. Suppose that the fund portfolio is European stocks and suppose that the next trading day is a market surplus. The Stock exchange is predicting the next day NAV price and is publishing bid/ask prices higher than yesterday's NAV.

So if you have to calculate the return of a mutual fund, you should distinguish between NAV prices and market exchange prices.


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